INVESTOR PRESENTATION

Q3 & 9M FY16
RESULTS UPDATE
February, 2016

DISCLAIMER
This presentation has been prepared by Tribhovandas Bhimji Zaveri Limited (TBZ) for informational purposes
only and does not constitute or form any part of any offer, invitation or recommendation to purchase or subscribe for
any securities in any jurisdiction, and no part of it shall form the basis of, or be relied upon in connection with, any
contract or commitment on the part of any person to proceed with any transaction.
The information contained in this presentation has not been independently verified. No representation or warranty,
express or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the
information presented or contained in these materials.
Any forward-looking statements in this presentation are subject to risks and uncertainties that could cause actual
results to differ materially from those that may be inferred to being expressed in, or implied by, such statements.
Such forward-looking statements are not indicative or guarantees of future performance. Any forward-looking
statements, projections and industry data made by third parties included in this presentation are not adopted by the
Company and the Company is not responsible for such third party statements and projections.
This presentation may not be all inclusive and may not contain all of the information that you may consider material.
The information presented or contained in these materials is subject to change without notice and its accuracy is not
guaranteed. Neither the Company nor any of its affiliates, advisers or representatives accepts liability whatsoever for
any loss howsoever arising from any information presented or contained in these materials. This presentation cannot
be used, reproduced, copied, distributed, shared or disseminated in any manner. No person is authorized to give any
information or to make any representation not contained in and not consistent with this presentation and, if given or
made, such information or representation must not be relied upon as having been authorized by or on behalf of TBZ.

DISCUSSION SUMMARY
Q3 & 9M FY16 Results Update
About Us
Financial & Operational Summary
Annexure

Q3 FY16 RESULTS UPDATE

PROFIT ANALYSIS (RS MN)
14.3%

13.2%

3.9%

4,957

238

1.1%

4.3%

6,125

0.7%

65
212
33

Q3 FY15
Sales

Q3 FY16

Q3 FY15

Q3 FY16

Q3 FY15

Gross Margin

EBITDA

EBITDA Margin

PAT

Q3 FY16
PAT Margin

OPERATIONAL EFFICIENCY (%)

Q3 FY16

Q3 FY15

3.2%

2.4%

4.0%

5.2%
Salaries

Advertisment

1.2%

1.0%
Rentals

1.2%

2.0%
Other Overheads

NOTE: Total hedging gain during 3Q FY16 was 98.6 mn. Other overheads include 57.5 mn of hedging gain which was used to set-off hedging loss of same amount
which was reported in H1 FY16. Other Income includes incremental hedging gain of 41.1 mn.
In Q3 FY15, other income included hedging gain of 11.9 mn.

Q3 FY16 RESULTS UPDATE

REVENUE ANALYSIS (RS MN)
31.2%

27.3%

9.6%

9.5%

4,595

3,800
1,341

1,036

Q3 FY15

Q3 FY16

Gold Sales

Diamond Sales

AVERAGE TICKET PRICE (RS)*

1,44,033
81,499

1,35,356
79,727

Q3 FY15
Gold - Ticket Size

Q3 FY16
Diamond - Ticket Size

Gold GM

Q3 FY16

Diamond GM

Gold

Diamond

% of Sales Q3 FY16

76.7%

20.9%

% of Sales Q3FY15

75.0%

21.9%

Sales Growth %

-17.3%

-22.8%

SS Sales Growth %

-20.9%

-28.2%

SS Total Sales Growth %

-23.0%

* At company owned stores

SS: Same store sales value growth

9M FY16 RESULTS UPDATE

PROFIT ANALYSIS (RS MN)
13.6%
14,712

13.5%

3.6%

13,496

527

0.5%

3.0%

-0.5%

76
403

-61

9M FY15
Sales

9M FY16

9M FY15

9M FY16

Gross Margin

EBITDA

EBITDA Margin

9M FY15
PAT

9M FY16
PAT Margin

OPERATIONAL EFFICIENCY (%)

9M FY16

9M FY15

3.6%

3.0%

3.3%

3.7%
Salaries

Advertisment

1.4%

1.2%
Rentals

2.5%

2.3%
Other Overheads

NOTE: Net Hedging Gain during the 9M FY16 was 41.1 mn. Other overheads include 57.5 mn of hedging gain which was used to set-off hedging loss of same
amount which was reported in H1 FY16. Other Income includes net hedging gain of 41.1 mn.

In 9M FY15, other income included hedging gain of 27.6 mn

9M FY16 RESULTS UPDATE

REVENUE ANALYSIS (RS MN)
29.4%

29.6%

9.0%

9.3%

11,040

10,356
3,350

2,786

9M FY15

9M FY16

Gold Sales

Diamond Sales

AVERAGE TICKET PRICE (RS)*

1,44,647
83,073

Gold - Ticket Size

9M FY16

Diamond GM

Gold

Diamond

% of Sales 9M FY16

76.7%

20.6%

% of Sales 9M FY15

75.0%

22.8%

Sales Growth %

-6.2%

-16.8%

SS Sales Growth %

-8.2%

-19.3%

1,31,304
82,690

9M FY15

Gold GM

9M FY16
Diamond - Ticket Size

SS Total Sales Growth %

-10.4%

* At company owned stores

SS: Same store sales value growth

BALANCE SHEET UPDATE

INVENTORY BREAKUP (%)
6.0%

6.7%

42.9%

42.0%

56.0%

63.0%

51.1%

51.3%

44.0%

37.0%

FY15

Dec-15

FY15

Dec-15

Gold

Diamond

Others

Own Gold

Gold on Loan

LEVERAGE (RS MN)

1.1
4,554

5,169

Dec-14

1.3

1.2
5,507
4,646

Mar-15
Equity

1.4

6,232
4,683

Jun-15
Net Debt

1.2

6,222
4,616

4,572

Sep-15

5,482

Dec-15

Net Debt/Equity
8

BUSINESS SCENARIO
The quarter witnessed lower consumer discretionary demand.
The company launched its First Franchise & 30th TBZ-The Original Store in
Dhanbad, Jharkhand in November 2015. Further, the company signed two more
franchisee agreements for its upcoming stores in Ranchi, Jharkhand and Jaipur,
Rajasthan.
The company recently tied-up with Snapdeal, to sell an exquisite range of

diamond jewellery and gold coins, extending the reach faster and addressing
younger generation effectively. The online jewellery platform is witnessing good
traction ever since its launch.
9

KEY RESULT TAKEAWAYS

REVENUES:
Q3 FY16 sales declined by 19.1% YoY
There was no contribution to sales from Kalpavruksha Scheme during Q3 FY16.
Kalpavruksha Scheme accounted for 14% ( 853 mn) during Q3 FY15.
9M FY16 sales declined by 8.3% YoY
Kalpavruksha Scheme accounted for 15.5% ( 2,280 mn) during 9M FY15.
MARGINS:
Gross margin during Q3 FY16 marginally declined on YoY basis primarily driven by
lower share of diamond jewellery and tactical discounts.

Adjusted EBITDA margin improved on YoY basis primarily due to effective cost control
(lower advertising/marketing and operating overheads).

10

KEY RESULT TAKEAWAYS

BALANCE SHEET:
The share of inventory on gold on loan increased from 56% as on Sep-15 to 63% as on Dec-15. The

companys endeavour is to further increase the share of gold on loan on an incremental basis.
The inventory level was within control as on Dec-15. The new store in Dhanbad was opened on
franchise basis, hence there was no impact on the inventory.

Leverage (Net Debt / Equity) decreased from 1.4x at Sep-15 to 1.2x at Dec-15.
Finance cost decreased on QoQ basis driven by lower borrowings and increase in share of Gold on
Loan.
The blended cost of debt was 8.7% during Q3 FY16 and is expected to decrease going forward as
the share of gold on loan increases.

11

RESULTS UPDATE DECEMBER 2015

Q3 FY16
()

Q3 FY15
()

YoY %

Q2 FY16
()

QoQ %

9M FY16
()

9M FY15
()

YoY %

FY15
()

Revenues

4,957

6,125

-19.1%

4,380

13.2%

13,496

14,712

-8.3%

19,342

COGS

4,304

5,252

-18.0%

3,855

11.7%

11,674

12,708

-8.1%

16,701

653

873

-25.3%

525

24.2%

1,822

2,004

-9.1%

2,641

13.2%

14.3%

-109 bps

12.0%

117 bps

13.5%

13.6%

-12 bps

13.7%

Personnel Expenses

158

146

8.4%

176

-10.2%

487

447

8.9%

567

Other Expenses

324

502

-35.5%

358

-9.7%

973

1,058

-8.0%

1,325

EBITDA

171.2

226.0

-24.3%

-9

2,023.3%

362

499

-27.5%

748

EBITDA Margin (%)

3.5%

3.7%

-24 bps

-0.2%

366 bps

2.7%

3.4%

-71 bps

3.9%

Depreciation

20

36

-44.1%

19

3.6%

62

103

-40.0%

84

Other Income

54

21

159.3%

536.3%

75

83

-9.9%

145

134

114

18.0%

147

-8.7%

429

365

17.4%

502

-87

PARTICULARS (IN MN)

Gross Profit
Gross Margin (%)

Interest Expenses
Exceptional Items

Profit Before Tax

71

98

-27.1%

-167

142.7%

-54

114

-147.5%

395

Tax

39

33

17.7%

-46

184.7%

38

-81.0%

134

PAT

33

65

-49.8%

-121

126.9%

-61

76

-181.2%

260

0.7%

1.1%

-40 bps

-2.8%

342 bps

-0.5%

0.5%

-97 bps

1.3%

Profit Margin (%)

12

RESULTS UPDATE DECEMBER 2015

PARTICULARS (IN MN)
(QUARTERLY UNAUDITED)

DEC-15
()

SEP-15
()

JUN-15
()

MAR-15
()

DEC-14
()

Shareholders Funds

4,617

4,572

4,683

4,656

4,554

Loan Funds

5,882

6,525

6,545

5,832

5,614

30

28

56

26

49

10,529

11,125

11,284

10,514

10,217

1,428

1,385

1,382

1,382

1,328

347

328

310

289

396

1,082

1,064

1,073

1,093

932

167

232

202

159

265

10,431

11,246

11,630

11,137

10,832

12

69

16

Cash and Bank Balance

400

303

313

325

445

Other Current Assets

144

155

85

134

104

Current Liabilities

1,708

1,880

2,088

2,342

2,377

Net Current Assets

9,280

9,829

10,009

9,262

9,020

10,529

11,125

11,284

10,514

10,217

Other Long Term Liabilities

Sources of Funds
Gross Block
Less: Acc. Depreciation
Net Block
Other Long Term Assets
Inventory
Debtors

Application of Funds

13

DISCUSSION SUMMARY
Q3 & 9M FY16 Results Update
About Us
Financial & Operational Summary
Annexure

ABOUT US: WHY IS TBZ DIFFERENT ?

Pedigree

Strong Brand Value

150 years in jewellery business

First jeweller to offer buyback
guarantee in 1938
Professional organisation
spearheaded by 5th generation of
the family

High sales productivity 234 k per sq ft per annum (at

mature stores)
High footfalls conversion - 79%
High ticket size - Gold - 85 k,
Diamond - 139 k
Specialty Wedding Jeweller

Scalability & Reach

30 stores (~98,200 sq. ft.)

Presence - 23 cities, 10 states
Expansion Plan ~150,000 sq. ft. (75% of
expansion (~33,000 sq. ft.)
through franchisee route)

TBZ
SUSTAINABLE
COMPETITVE
ADVANTAGE

~ 65% of sales are wedding &

wedding related purchases
Compulsion buying
Stable fixed budget purchases by
customers

Design Exclusivity

34 designers (incl. 11 CAD)

8 - 10 new jewellery lines/year
In-house diamond jewellery
production
Customer loyalty
Premium pricing
15

ABOUT US: KEY MILESTONES

STRONG LEGACY OF AROUND 150 YEARS BUILT ON TRUST
Flagship store
opened in Zaveri
Bazaar, Mumbai

Introduced 100%
pre-hallmarked
jewellery
First to launch
light weight
jewellery

1864

1938

1995

Diamond facility
expansion - ~6k
to ~24k sq ft
Turnover crossed
5,000 mn in
FY09

2001

2004

2008

2009

2011

Retail footprint
crosses 42k sq ft
across 13 stores

First to offer
buyback
guarantee
Mr Shrikant
Zaveri took over
the business

2011

Retail footprint
crosses 84k sq ft
across 20 cities

First Franchise
Store and 30th
TBZ store opened
at Dhanbad,
Sales crossed
Jharkhand
in
16,000 mn, PAT
November 2015
of 850 mn

2012

Listed on BSE &

NSE with IPO of
2,000 mn
Implementation
of Oracle ERP
Suite

2013

2014

Recommended
special dividend
of 7.5% on the
special occasion
of 150th year of
the company

2015

2015

Two more
Franchise
Agreements
signed for
upcoming Ranchi
& Jaipur stores
16

ABOUT US: SHAREHOLDING STRUCTURE

SHAREHOLDING PATTERN DEC 2015

PUBLIC, 12.4%
INSTITUTIONS
, 13.5%

PROMOTER,
74.1%

KEY INSTITUIONAL INVESTORS

% HOLDING

Smallcap World Fund INC

5.77%

HSBC Global Investments

3.31%
17

ABOUT US: RETAIL PRESENCE

Present across 23 cities
in 10 states

PAN-INDIA PRESENCE WITH 30 STORES

WITH A RETAIL SPACE OF ~98,200 SQ. FT.
SPREAD ACROSS 23 CITIES IN
10 STATES.
NUMBER OF STORES

Dhanbad

TILL DATE

Large Format

24

Small Format

Tier I

17

Tier II

Metros

Total Stores
Total Area

30
~98,200

Bandra

18

ABOUT US: RETAIL FOOTPRINT EXPANSION

HIGH SALES PRODUCTIVITY (REVENUE / YEAR / SQ FT)

301
270

44,196

82,368

88,093

91,058

98,200

255
214

216

25

27

28

30

FY13

FY14

FY15

9M FY16

47,796

14

14

FY11

FY12
Carpet Area

No. of Retail Outlets

192

Revenue/average sqft * ( '000/sq ft)

* Average of retail area at the beginning and at the end of the financial year
** Sales productivity over last 12 months. Productivity at mature stores 234 k per sq ft

19

DISCUSSION SUMMARY
Q3 & 9M FY16 Results Update
About Us
Financial & Operational Summary
Annexure

FINANCIAL SUMMARY
REVENUE (RS MN)
CAGR 13%
16,583

18,243

EBITDA (RS MN)

PAT (RS MN)

1,476

850

19,342

1,327

1,221

13,855
11,939

572

888

827

551

392
260

FY11

FY12

FY13

FY14

FY11

FY15

FY12

FY13

FY14

FY15

45.1

7.4

3.3

17.5

8.8
4.1

FY12

7.3

5.1

13.8

4.3

Gross Margin (%)

FY14

FY15

EBITDA Margin (%)

7.2

12.8
5.7

2.0
1.3

FY15

14.1

24.5

3.0
FY13

FY14

29.8

27.9

16.9

1.3
FY11

FY13

42.9
34.7

18.8

8.9

FY12

LEVERAGE & RETURN METRICS

MARGINS (%)

15.7

FY11

FY11

PAT Margin (%)

FY12
ROCE (%)

1.3

1.2

FY14

FY15

1.0

FY13

ROE (%)

D/E

NOTE:
* FY15 EBITDA has been adjusted to include net hedging gain of 78.1 mn which is shown under other income in P&L. FY14 EBITDA already included net hedging loss of 1.2
mn which was included in other expenses in P&L.
** FY15 PAT includes the after-tax impact of 91.6 mn due to an exceptional gain from change in depreciation policy.

21

OPERATIONAL SUMMARY
GOLD & DIAMOND VOLUMES
53,220

51,995

GOLD & DIAMOND SALES MIX (%)

52,010

48,662
43,808

4,110

73%

22%

FY11

FY12
Gold Sales (kgs)

FY13
FY14
FY15
Diamond Sales (cts)

GOLD & DIAMOND MARGINS (%)

35.2%

36.0%

12.2%

29.5%

FY11

10.9%

FY12

12.2%

FY13
Gold

FY11

23%

25%

FY12

FY14

Diamond

75%

21%

FY13
FY14
Gold Diamond

22%

FY15

OPERATIONAL EFFICIENCY (%)

33.6%

29.3%

13.2%

77%

4,706

4,361

3,710

3,654

75%

72%

2.6

2.5

1.2

1.3

3.2

2.4

3.3

3.3

3.4

2.9

FY13

FY14

FY15

2.5
1.9
0.7

2.1
0.8

0.9

2.5

2.4

3.0

3.3

FY11

FY12

Salaries

Advertisement

9.2%

FY15

Rentals

Other Overheads

22

OPERATIONAL SUMMARY
SSSG - TOTAL (%)

SSSG - GOLD (%)

SSSG - DIAMOND (%)

34.2

31.3

31.2

29.6
-5.1%
excl. coins

11.2

13.0

9.0
4.0

3.5

1.3

-0.2

FY11

FY12

FY13

FY14

FY11

FY15

FY12

AVERAGE TICKET SIZE (RS 000)

141
98
84

139

131

123
76

84

FY12

FY13

FY14

FY15

SSSG: Same store sales value growth

FY15

FY12

FY13

-15.8
FY14

FY15

FOOTFALLS & CONVERSION

87%

1,96,991

FY13
FY14
Gold
Diamond

FY11

86%

85

60

FY11

-8.6

-9.3

-9.9

FY11

78%

77%

79%

2,37,006

2,55,551

2,54,885

1,84,114

FY12
FY13
FY14
Footfalls
% Conversion

FY15

23

THANKYOU

Saurav Banerjee, CFO

Tribhovandas Bhimji Zaveri Limited
+91 022 30735000
saurav.banerjee@tbzoriginal.com

Nilesh Dalvi/Mandar Kapse

Dickenson Seagull IR
+91 9819289131/+91 9867550004
nilesh.dalvi@dickensonir.com
mandar.kapse@dickensonir.com

ANNEXURE

AWARDS & RECOGNITION

BEST NECKLACE DESIGN AWARD 2016
JJS-IJ Jewellers Choice Design Award - 2016
ASIAS MOST POPULAR BRANDS 2014
World Consulting & Research Corporation (WCRC) - 2014
BEST JEWELLERY COMPANY AWARD
Gems & Jewellery Trade Council of India Excellence
Awards - 2014
BEST DIAMOND JEWELLERY & BRACELET
DESIGN
Indian Jeweller Jewellers Choice Design Award - 2014
COLOURED GEMSTONE JEWELLERY OF THE
YEAR
Annual Gemfields & Nazraana Retail Jeweller India Awards
- 2014
360 DEGREE MARKETING CAMPAIGN OF THE
YEAR
Annual Gemfields & Nazraana Retail Jeweller India
Awards - 2014
BEST RETAIL MARKETING CAMPAIGN NEW
AGE BRIDE
Asia Retail Congress - 2014
26

BUSINESS MODEL: PRODUCT

GOLD
(75%)

DIAMONDS
(25%)

Gross Margins 11%

Stock Turns 2.5x - 3x

Gross Margins 35%

Stock Turns 1x

WEDDING (65%)
FASHION (35%)

WEDDING (40%)
FASHION (60%)

WEDDING SALES TO DRIVE STRONG VOLUMES

WEDDING & FASHION SALES TO DRIVE FUTURE GROWTH

27

MANUFACTURING

PROCUREMENT

BUSINESS MODEL: MANUFACTURING

Gold
Raw Material - Bullion
Sources:
Exchange & purchase of old jewellery
Bullion dealers
Banks - imported gold
Banks - domestic gold (gold deposits) on loan

Gold jewellery manufacturing is outsourced.

Vast nation-wide network of 150 vendors
Each vendor has an annual gold processing
capacity of more than 100 kg.
These vendors are associated with TBZ since
generations and are experts in handmade
regional jewellery designs.

28

MANUFACTURING

PROCUREMENT

BUSINESS MODEL: MANUFACTURING

DIAMOND
Raw Material - Cut & polished diamonds
(VVS grade)

Sources:
DTC site holders
Other vendors
In-house diamond jewellery manufacturing
leading to exclusive designs, lower costs,
and higher margins
Manufacturing facility at Kandivali,
Mumbai spread over ~24,000 sq ft with
capacity of ~200,000 cts (on dual shift
basis).
The facility also has capacity for 4,000 kg of
gold refining and 4,500 kg of gold jewellery
components manufacturing.

29

BUSINESS MODEL: RETAIL

EFFICIENT INVENTORY MANAGEMENT
SMALL STORES

HUB & SPOKE MODEL - ROI OPTIMISATION

SMALL
STORE

SMALL
STORE

LARGE FORMAT
STORE

LARGE STORES

SMALL
STORE

SMALL
STORE

1,000 - 1,500 sq ft
Across the city
Smaller range
Lower price points
(up to 500k)
Inventory - 93 mn
Gold : Diamond - 70 : 30

3,000 sq ft & above

Standalone high street - heart of city
Wider range
Higher price points
(up to 2,000k)
Inventory - 280 mn
Gold : Diamond - 70 : 30
30

BUSINESS MODEL: ECONOMICS

PARTICULARS

LARGE FORMAT

SMALL FORMAT

Above 3,000

1,000 1,500

250,000

250,000

75:25

75:25

11% : 35%

11% : 35%

17.2%

17.2%

Advertising

2.5%

2.5%

Salary

1.1%

1.1%

Rentals

1.0%

1.0%

Other Overheads

1.5%

1.5%

11.1%

11.1%

Store Capex (mn)

18

7.5

Store Working Capital (mn)

280

93

Size sq ft
Average Sales per sq ft in Year 1 ()
Gold : Diamond
Gross Margin - Gold : Diamond
Blended Gross Margins
Store Costs:

Store Operating Margins

ROCE
Store Cash BEP (in months)

28%
8-10 months
31

BUSINESS MODEL: SCALABILITY

TBZ has an expansion plan to increase its retail space from ~98,200 sq. ft. at present to around
150,000 sq. ft. by FY18.
TBZ plans to carry out 75% of the expansion through the franchisee route and balance 25% through
the addition of its own stores.
All the prospective expansion locations have already been identified backed by 2 years of extensive
market research.

Number of Stores
Retail Sq ft
Number of Cities

FY12

Till Date

target

14

30

57

~48,000

~98,200

~150,000

10

23

43

32

GOLD METAL LOAN: EFFICENT SOURCING CHANNEL

GOLD METAL LOAN ORIGINATION

TBZ takes 10 kg gold from a bank on lease on day 0.

The contract for gold lease is 180 days.
TBZ provides a bank guarantee worth 110% of gold leased.
Total Financing cost (interest on gold lease plus bank
guarantee commission) to TBZ is ~3.5-4.5% p.a.

GOLD METAL LOAN REPAYMENT

TBZ repays the gold daily based on actual sales of gold
jewellery.
The bank converts 1 kg of gold on lease as a sale to TBZ
at a reference rate set by them as on day 1.
TBZ books a purchase of 1 kg of gold.
The balance 9 kg worth of gold continues to remain on
lease.
TBZ again replenishes the inventory by taking 1 kg of gold
on lease from bank on day1.
Since TBZs gold jewellery inventory turns 2-3 times, it
repays the gold lease before 180 days.

GOLD METAL LOAN ADVANTAGES

GOLD METAL LOAN REPAYMENT

Interest Cost Savings: Borrowing cost on gold lease is

significantly lower compared to working capital borrowing
cost.

Sharp increase in gold prices: Gold lease is marked to

market on a daily basis. So any increase in gold price will
cause TBZ to top up its bank guarantee.
Bank Guarantee limitations: Bank guarantee issued by
the bank to TBZ is based on the drawing power enjoyed by
TBZ.
Contract Period: If TBZ is unable to sell the gold on lease
within 180 days, then they will have to convert the balance
unutilized gold to purchase.

No Commodity Risk: Since gold is taken on lease, there is

no gain if gold prices increase or loss if gold prices
decrease.

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